Compulsory Liquidation

Where the directors of an insolvent company have not acted in the interests of stakeholders by placing the company into voluntary liquidation, creditors are entitled to petition for the winding up of the company providing they are owed £750 or more and their debt is admitted.

Consequently the process is a Court driven one where the Official Receiver (a Government Official who is also a licensed insolvency practitioner) is initially appointed.  In certain circumstances, an independent insolvency practitioner may be appointed to deal with any assets held by the liquidated company.  However, the Official Receiver retains his statutory obligations to investigate the circumstances surrounding the company's failure.

In both voluntary and compulsory liquidations, a minimum of 3 and a maximum of 5 creditors may be elected to serve on a liquidation committee.  The committee's prime function is to assist the Liquidator in carrying out his investigative duties and to pass certain resolutions on behalf of the body of creditors.